Adicet Bio, Inc. — FY 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. The company is a clinical-stage biotechnology business developing allogeneic “off-the-shelf” gamma delta T-cell cancer therapies; it has no approved products and has not generated product sales.
Financial performance and liquidity
| Metric | FY 2022 | FY 2021 |
|---|---|---|
| Revenue, all related-party | $25.0 million | $9.7 million |
| Research and development expense | $71.2 million | $48.9 million |
| General and administrative expense | $26.3 million | $22.2 million |
| Total operating expenses | $97.5 million | $71.2 million |
| Loss from operations | $72.6 million | $61.4 million |
| Net loss | $69.8 million | $62.0 million |
| Net loss per share, basic and diluted | $1.70 | $2.00 |
| Cash and cash equivalents at year-end | $257.7 million | $277.5 million |
| Net cash used in operating activities | $44.8 million | $51.1 million |
- 2022 revenue included a $20.0 million Regeneron option-exercise fee for ADI-002; the remaining revenue primarily reflected collaboration work. The filing reports no product revenue.
- R&D expense rose 46%, principally from higher personnel, clinical/manufacturing contractor, facility and laboratory costs. G&A expense rose 18%, mainly from increased personnel costs.
- Cash used in investing activities was $16.8 million, primarily for Redwood City facility construction and equipment. Financing activities provided $41.5 million, largely from a $43.4 million net ATM offering.
- Current assets were $261.0 million and current liabilities were $19.7 million at year-end. Total liabilities were $38.4 million, including $21.0 million of operating lease liabilities.
- No term-loan debt was outstanding at year-end; $10.6 million remained available under the PacWest facility. The facility is subject to covenants and secured by substantially all assets other than certain intellectual property.
- Product margins are not meaningful because Adicet has no approved products or product sales. The company reported no income tax provision in 2022.
Material changes and developments
- Net loss increased by $7.8 million year over year despite higher collaboration revenue. Revenue growth was largely attributable to the one-time ADI-002 option fee.
- Cash and cash equivalents declined by $19.9 million during 2022, while operating cash use decreased from 2021; spending on facility construction increased.
- Common shares outstanding increased from 39.7 million to 43.0 million during 2022, including 2.6 million shares issued through the ATM offering.
- In January 2022, Regeneron exercised its exclusive worldwide license option for ADI-002 and paid $20.0 million. Adicet declined its co-funding option; Regeneron bears future development, manufacturing and commercialization costs, and Adicet may receive royalties on future sales.
Pipeline, outlook and risks
- ADI-001: In an ongoing Phase 1 trial for relapsed or refractory B-cell non-Hodgkin lymphoma (NHL); FDA Fast Track Designation was granted in April 2022. In interim data presented in December 2022, 16 patients were efficacy-evaluable: overall response rate was 75% and complete response rate was 69%. Five patients with large B-cell lymphoma who had relapsed after prior autologous anti-CD19 CAR T therapy all achieved response and complete response. The company reported no dose-limiting toxicities, graft-versus-host disease, or Grade 3-or-higher CRS or ICANS in the reported data. These are early, small-sample, interim results, with follow-up ongoing.
- Management planned discussions with the FDA in Q2 2023 on a potential pivotal path, a possible pivotal study in post-CAR-T large B-cell lymphoma in the second half of 2023, and a further Phase 1 update in the first half of 2023. These are forward-looking plans, not guarantees.
- ADI-925: Preclinical engineered CAd gamma delta T-cell candidate targeting tumor stress ligands; the company expected to submit an IND in the second half of 2023. Additional internal candidates remained in discovery or preclinical development.
- Management stated that $257.7 million of year-end cash was expected to fund forecasted operations, capital expenditures and debt service for at least 12 months from the financial-statement issuance date. Elsewhere, management estimated the company was capitalized into the first half of 2025; both estimates depend on assumptions, and additional financing will be required for longer-term development and commercialization.
- In March 2023, after year-end, Adicet moved $187.2 million from PacWest insured cash sweep accounts to Pacific Western Asset Management, which invested the funds in money market funds held in custody at U.S. Bank. The filing reported approximately $10.0 million remained in PacWest demand-deposit and insured cash sweep accounts at the filing date. The company disclosed risks related to bank and financial-services instability and loan covenants.
- Key risks include clinical efficacy, durability and safety uncertainty; dependence on ADI-001; regulatory and trial delays; reliance on third-party manufacturers and suppliers; substantial future financing needs; competition; and potential collaboration, intellectual-property and supply-chain issues. The company reported no material legal proceedings. Management assessed internal control over financial reporting as effective; the auditor did not provide an internal-control attestation.
Important facts for investors to verify
- Updated ADI-001 patient counts, follow-up duration, response durability and safety results, particularly for the post-CAR-T subgroup and higher dose levels.
- Whether FDA discussions support the proposed pivotal-trial design and whether the planned study and ADI-925 IND were initiated on schedule.
- Cash burn, cash runway and financing needs against the company’s development and facility plans; distinguish recurring operating funding from one-time collaboration payments and equity issuance.
- Current location, custody and availability of cash, and compliance with PacWest covenants after the March 2023 transfer and the temporary covenant arrangement ending June 30, 2023.
- Manufacturing readiness, supply reliability and costs as Adicet expands internal GMP capabilities and continues using third-party manufacturers.